Mr. Robert Morin
Secretary General
Canadian
Radio-television and
Telecommunications
Commission
Ottawa, ON
K1A 0N2

Dear Mr. Morin:

1.
Friends of Canadian Broadcasting is an
independent watchdog for Canadian programming in the audio-visual system,
supported by 150,000 Canadians. We welcome the opportunity to comment and wish
to appear at the public hearing to provide the Commission with a viewers'
and listeners' perspective on the issues.

2.
We note that many of the Commission's proposals intended
to increase flexibility for station groups were put forth at a time when the
recession depressed the most recent financial information available to the
Commission (the 2009 broadcasting year), which called into question the
viability of English-language private conventional television.

3.
We also note that the Commission's proposals
predate the recent upheaval in the ownership structure of English-language
station groups. The financial resources of the station groups should now be
considered in the context of the financial capacity of the vertically-integrated
companies of which they now constitute a part.

4.
Just as the BDUs used to insist that the financial
capacity of conventional television should be seen in the context of the
overall profitability of their respective station groups, so the financial
capacity of newly acquired station groups needs to be considered in the wider
context of their new ownership structures, including other lines of business
such as home phone and Internet. As in many companies, some parts of the
overall business cross-subsidize other parts - a cost of doing business. We therefore urge the Commission to
consider the capacity of the whole business.

5.
We also recommend that the Commission exercise
great caution going forward when considering proposals to change the nature of
service or programming categories of specialty channels to ensure that they do
not lead to a reduction of their 'specialty' (unique program offerings).

6.
In recent years, spending on Canadian
programming by the English-language private conventional television groups has
been close to 30% of the preceding year's revenues:

7.
FRIENDS has reviewed the Canadian programming
expenditures of the specialty and pay services of the four station groups and
compared this total to the level proposed under the Canadian Programming
Expenditure (CPE) regime. This research suggests
that implementation of the proposed regime would result in a reduction of approximately
$90 million annually in Canadian programming spending by the four groups taken
together. Note that 51% of this reduction would come from CTV and 46% from
Shaw Media:

8.
We append to this submission detailed
information for each of the station groups, from which the above summary is
derived. (See page 6.)

9.
The proposed funding requirement for Programs of
National Interest (PNI) features a requirement for 5% of total revenues in the
preceding year to be devoted to a combination of drama (Category 7) and
long-form documentary (2[d]). The following chart shows that Category 7
spending averaged 6.4% of the preceding year's revenue in 2009. While the
Commission's published data do not permit identification of spending on
sub-Category 2[d], these data indicate that the proposed PNI requirement would reduce combined Category 7 plus 2[d]
spending by in excess of $70 million per annum:

10. Achieving
a new regime without depressing Canadian Programming Expenditures will require
a 32% CPE:

11.
As outlined above, achieving a Programs of
National Interest regime without depressing Category 7 programming expenditures
would require at least a 6.4% PNI, plus an amount that the Commission could
determine based on Category 2[d] expenditures (a statistic which the Commission
does not publish):

12.
CTV has argued that the end of analog preference
packaging could adversely affect analog revenues. [1] FRIENDS doubts that the BDUs which control this packaging will engage in
packaging practices that will negatively affect their own services' revenues.

13.
CTV's application also states that "the
Commission can no longer expect the larger, more profitable undertakings of a
particular corporate group to subsidize the less profitable assets". [2] Why not?

14.
Despite the Commission's significant effort to
extend flexibility, each applicant has put its hand out in an Oliver Twist-like
request: "Please, Sir, I want some more" - asking for a variety of exceptions.
One has proposed an exception to the CPE regime for Category B services (a
lower 15% CPE). Another has proposed relief from the requirement to spend 75%
of PNI with independent producers. FRIENDS recommends that the Commission make
no exceptions.

15.
Finally, a few comments regarding digital transition. Recent CMRI data
indicate that 29% of Canadian households operate at least one analog television
to receive over-the-air signals. Three million Canadians rely on analog
over-the air signals for their connection to the audio-visual system. Most of
them have low incomes and are senior citizens.

16.
The isolation they will face with anger on
September 1, 2011 will have political ramifications, particularly when they
find out that the vacated frequencies that deprive them of their television
experience have generated in excess of $4 billion in windfall revenue for the
Government of Canada. Yet the government, unlike its American counterpart, has
financed no program to subsidize their continued access to television signals
they require to stay connected in their communities and to participate as
citizens in this country's affairs. These people vote!

17.
Yet, the Commission having adopted a digital
plan, it is vital that all broadcasters adhere to this plan - including the CBC,
which is seeking to subvert the plan in its application for a digital
transmitter for CBAT in New Brunswick. Most of the station groups seem to be on
schedule to meet the Commission's August 31, 2011 deadline.

18.
They should be strongly encouraged to adhere to
the Commission's deadline in mandatory markets and should be required to
install transmitters in other smaller markets rather than use the digital
transition as an occasion to drive customers to Bell TV or Shaw Direct.

Yours
sincerely,

Spokesperson

cc: The applicants by email (proof of transmission retained)

For information: Jim Thompson 613-567-9592

ADDENDUM

Friends of Canadian Broadcasting Station Group
Renewal Intervention

Station
Group Canadian Programming Expenditures for Specialty and Pay Services[3]